A strong shipbuilding industry is essential not only for maritime self-reliance but also for economic growth, employment generation, industrial development and national security. Even with a coastline of over 11,000 km, a large maritime trade volume and significant human resources, India’s contribution to global shipbuilding remains insignificant. In view of this, the government is implementing a comprehensive policy framework to transform India into a major global shipbuilding nation by 2047.
Current status
India has a diverse maritime ecosystem comprising 12 major ports, 217 non-major ports, 111 declared national waterways and a fleet of approximately 1,500 vessels. Around 500 vessels operate in overseas trade while more than 1,000 serve the coastal sector.
The country currently has about 61 registered shipyards, ranging from small-and medium-sized facilities to large-scale shipbuilding yards. Major defence-focused shipyards under the Ministry of Defence include Mazagon Dock Shipbuilders, Goa Shipyard Limited, Garden Reach Shipbuilders & Engineers, Hindustan Shipyard Limited and Goa Shipyard Limited. Public sector shipyards under the Ministry of Ports, Shipping and Waterways include Cochin Shipyard Limited (CSL) and Hoogly Shipyard Limited. Important private shipyards include L&T Kattupalli and Swan Defence & Heavy Industries.
Among Indian shipyards, Swan Defence’s Pipavav facility holds the largest capacity and can build vessels up to approximately 450,000 deadweight tonnage (DWT), while Cochin Shipyard can construct ships up to around 200,000 DWT. Most other shipyards have capacities below 80,000 DWT.
Despite these capabilities, India currently accounts for less than 1 per cent of global shipbuilding output and ranks around 16th globally. Only about 7 per cent of Indian-owned ships are built domestically, while the majority are constructed overseas. This indicates a substantial gap between India’s maritime trade requirements and its domestic shipbuilding capacity.
Why shipbuilding matters
The government views shipbuilding as a strategic “mother industry” due to its strong linkages with steel, engineering, manufacturing, logistics, electronics, defence production and maritime services. Every investment in shipbuilding creates significant economic multipliers.
Studies indicate that shipbuilding has a strong economic multiplier effect, generating an employment multiplier of approximately 6.4 times and an investment multiplier of 1.82 times. This means that growth in shipbuilding stimulates activity across various sectors of the economy.
The importance of shipbuilding is further reinforced by India’s growing trade volumes. By 2047, India’s export-import (EXIM) cargo is expected to reach nearly 5.7 billion tonnes. Currently, a large portion of this cargo is carried by foreign-owned vessels. The government aims to increase the share of cargo transported by Indian-owned and Indian-built ships.
Historical experience and lessons learned
India’s shipbuilding industry has experienced periods of both growth and decline. Between 2002 and 2007, the government provided financial subsidies to shipyards, resulting in substantial growth. During this period, India’s global shipbuilding share increased from around 0.02 per cent to 1.25 per cent. However, after the withdrawal of policy support around 2007-08, the industry entered a prolonged downturn. Several major shipyards faced financial distress and insolvency proceedings.
A number of structural challenges also continue to impact India’s competitiveness. First, shipbuilding is a highly capital-intensive industry requiring substantial investments in dry docks, fabrication facilities, cranes and waterfront infrastructure. Second, India faces gaps in ship design capabilities, particularly for larger commercial vessels such as bulk carriers and tankers. While Indian yards perform strongly in naval and defence shipbuilding, commercial shipbuilding expertise requires further development. Third, production efficiency remains lower than that of leading shipbuilding countries such as China, South Korea and Japan.
Fourth, shortages of skilled labour continue to affect productivity. Shipbuilding requires specialised skills in welding, outfitting, marine systems integration, fabrication and quality control. Fifth, India relies heavily on imported ship equipment and marine components. While hull construction can be undertaken domestically, many high-value systems still need to be sourced internationally. Finally, limited commercial shipbuilding demand and dependence on defence orders have constrained the industry’s growth.
The government is aware that long-term and predictable policy support is essential for developing a globally competitive shipbuilding sector. This understanding has shaped the current policy initiatives.
Government’s vision for 2030 and 2047
India’s shipbuilding strategy is guided by two major policy frameworks – Maritime India Vision 2030 and Maritime Amrit Kaal Vision 2047. Under these frameworks, India aims to become one of the top 10 shipbuilding nations by 2030 and subsequently one of the top five shipbuilding nations by 2047; generate approximately 28 million maritime-related jobs by 2030 and take this up to 150 million by 2047; increase domestic shipbuilding capacity significantly; and expand Indian ownership and operation of merchant vessels. The long-term target is to increase annual shipbuilding output to approximately 5 million gross tonnes (GT) by 2047.
Shipbuilding Financial Assistance scheme
The cornerstone of government support has been the Shipbuilding Financial Assistance (SBFA) Scheme. The SBFA Scheme 2016-26 allocated approximately Rs 40 billion to support domestic shipbuilding. Under this programme, shipyards received financial assistance upon vessel delivery, ranging from 14 per cent to 20 per cent of project costs. Green vessels received support up to 30 per cent.
The results have been encouraging. Orders worth approximately Rs 160 billion were secured. Around 360 ships entered the construction pipeline. More than 23,500 direct jobs and 125,000 indirect jobs were generated. Around Rs 288 billion worth of economic activity was added to the Indian GDP.
Building on this success, the government has proposed a significantly expanded SBFA framework with an allocation of nearly Rs 240 billion.
Promoting green shipbuilding
A major focus of future policy is sustainable and environmentally friendly shipbuilding. The government will provide enhanced incentives for vessels powered by methanol, ammonia, hydrogen and other approved green fuels. Fully electric and hybrid-electric vessels will also receive special financial assistance. This will align India’s shipbuilding policy with its broader green transition goals as well as emerging international environmental regulations.
Maritime Development Fund: Financing the industry
Recognising that shipbuilding requires large-scale financing, the government has created the Maritime Development Fund (MDF). The MDF comprises a total budgetary support of approximately Rs 250 billion from FY 2026 to FY 2036. It will have two parts – the Maritime Investment Fund (MIF) with an initial corpus of Rs 200 billion, and the Interest Incentivisation Fund (IIF) with a corpus of Rs 50 billion. Under the MIF, budgetary support will be 49 per cent, or Rs 98 billion, while the remaining contribution will come from ports and private investors. It will largely support equity financing for the maritime sector. Meanwhile, the IIF will be supported through 100 per cent budgetary allocations. It will facilitate debt financing by reducing borrowing costs.
The MDF is a step in the right direction. The long gestation period of maritime projects requires long-term capital. Further, a professionally managed fund structure is essential to balance commercial projects and strategic priorities. Furthermore, sovereign backing helps de-risk and build investor confidence, when perceived sectoral risks deter private investment. The planned blended finance model would use concessional capital to balance risk-return profiles of diverse investors.
Development of mega shipbuilding clusters
Infrastructure development is a key pillar of government strategy. A cluster-based approach is an attractive proposition for both shipyards and ancillaries as it will enable efficient utilisation of common assets and connectivity infrastructure. The government plans to establish three to four greenfield mega shipbuilding clusters across the country. These clusters will feature common dry docks, breakwaters, dredged channels, outfitting berths, utilities, shared logistics infrastructure, ancillary manufacturing ecosystems, etc. The model is inspired by successful shipbuilding clusters such as Ulsan in South Korea.
The first cluster is planned in Tamil Nadu through collaboration between V.O. Chidambaranar Port and SIPCOT. Additional locations under consideration include Andhra Pradesh, Odisha, Gujarat and Maharashtra. Each cluster may involve investments of Rs 100 billion-Rs 200 billion.
Upgrading existing shipyards
In addition to greenfield development, the government is supporting brownfield expansion of existing shipyards. Under this initiative, up to 25 per cent of capital expenditure can be provided as government support for upgrading facilities such as dry docks, floating docks, shiplifts, cranes, block fabrication yards and outfitting berths. This will help existing shipyards improve productivity and compete more effectively in global markets.
Strengthening technology and skills
To address capability gaps, the government plans to establish the India Ship Technology Centre. The centre will focus on ship design, research and development, testing facilities, training programmes and non-destructive testing capabilities. The objective is to create indigenous expertise in advanced commercial shipbuilding and reduce dependence on foreign technologies.
Demand aggregation and future opportunities
A key innovation in government strategy is demand aggregation. The government has worked with public sector enterprises from the oil, steel, fertiliser and shipping sectors to identify future vessel requirements. It has identified demand for more than 200 ships, approximately 8.6 million GT of capacity, translating into shipbuilding demand worth Rs 1.5 trillion. This demand pipeline provides long-term visibility to shipyards and encourages investment in capacity expansion.
Conclusion
India’s shipbuilding industry is set to undergo a significant transformation. The government is implementing comprehensive maritime initiatives such as financial incentives, infrastructure development, maritime financing, technology support, green shipping and regulatory reforms. Once successfully implemented, these strategies will help India in increasing its shipbuilding output to around 5 million GT by 2047 and emerge among the world’s top five shipbuilding countries, generate millions of jobs and ensure that a much larger share of India’s growing maritime trade is carried by Indian-built and Indian-owned ships.
Based on a presentation by the Directorate General of Shipping at a recent India Infrastructure conference
